Author Archives: Mads Kristensen

Game, set and match: The customer?

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There is no doubt in my mind that the empowerment online of customers over companies is a very good thing. If for nothing else it may in due time help promote the creation of meaningful and valuable products, tools and services over just endless piles of meaningless, valueless junk. Who in their right minds can argue against that?

I also think that with the upcoming legislation surrounding improved privacy, restriction on 3rd party cookies etc, life will be very tough for companies not actually producing anything but living off arbitraging the products of others. Again, not necessarily a bad thing – unless your business is arbitrage of course – since it again will keep focus on the real value creation.

Now, all we really need is for people – the customers – to apply their powers in a meaningful, value creating way and not just consume more meaningless junk because that was essentially all they were brought up to do. Oh, well…

5 flaws of the Facebook IPO

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So it’s finally here; the most talked about IPO for years – Facebooks. Mark Zuckerberg and his cronies are looking for 5B USD to boost growth and secure one heck of a pay day for a great number of people including the resident graffiti artist. And let me just say that I won’t be standing in line when the company goes public. For 5 reasons:

  1. The company is overvalued. I’m pretty sure that all the great expectations for Facebook world dominance has already been factored in as part of the value of the company, and this of course constitutes the problem that if things don’t go as well as Zuckerberg has planned, the stock price is going to implode faster than you can say ‘gone!’.
  2. The real winners have already been there. Remember, this is somebody elses payday, and you’re being asked to make it happen. So in reality what these guys will be doing is transfer a heck of a lot of risk to you. One thing that will be very interesting to watch is to what extend the old guard will cling to their stock. This will send a strong signal about the real value and potential of the Facebook stock.
  3. Facebook is making too little money. Period. I’m not super impressed with the numbers released considering the sheer scale of the operation, and more importantly I see no tangible reason why it’s ability to grow both top and bottom line should explode anytime soon.
  4. Reliance on a few partners. As happy as I currently am to be a shareholder of Zynga, I’m concerned that this company alone accounts for 12% of Facebooks revenues. Of course it’s good for the power balance, as Zynga relies completely on Facebook, but on the other hand the Facebook bottom line is just as good as Zyngas next big hit. That’s risk if I ever saw it.
  5. There is absolutely no mobile business play. Mobile is quickly becoming the number 1 platform, and Facebook doesn’t make a cent from it’s mobile services. How’s that for supporting a 100B USD valuation of the company?

So all in all, I’m not going to invest here. I won’t rule out that I will do a little once the stock price takes a dive after the initial hype. But it won’t be with my life savings.

3 reasons why big data isn’t all that

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Big data is a big deal to a lot of big companies. In fact it seems like all the industries losing their old business models are betting that big data will somehow on the fly create new revenue streams for them. But like Daniel W Rasmus from FastCompany, I doubt it. And I definitely know if won’t be as easy as many seem to think. Here are three reasons why:

  1. Data is history and assumptions may be wrong. All databases are structured based on what the people creating them already know and assume. And thus they will be tailored to old needs rather than the needs of tomorrow. If a database is structured based on what you already know, how are you ever going to extract data from it that generate fundamentally new insights – and thus new revenues – for you? And what if everything you know really is wrong (as is often the case when old business models implode from under your feet).
  2. Most organizations are utterly clueless at what they want to get out of data. They may have an idea about how they get data into the system, but if you ask them how to get data out and how to get new insights, they become long-faced and talk for hours about complexity, lack of interoperability etc. What is a database worth, if you cannot extract anything meaningful and analytical complex from it? Not really much in my book.
  3. Regulators may end up destroying the nascent business model. The EU is working tirelessly so secure online privacy of it’s citizens including the “right to be forgotten” (a very interesting way of putting it), and if the legislation gets ratified like some would like it, it will effectively kill businesses opportunity to collect and store data on their customers and build new business from it. If that happens not only millions and millions of dollars will have been wasted – entire companies will collapse in the process. It won’t be pretty, and everybody will be back to square one.

All in all I think it’s way to soon to say that big data is going to be big business. There is too big a lack in strategy, competencies for managing and extracting the value of data and uncertainty about legislation for it to be the next sure big thing.

 

Can you really make it work?

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One of the most interesting things we fail to discuss when we’re discussing innovation, is whether we can actually make all our innovations operational. Because how often don’t we find ourselves in a situation, where we think we have created a great product, yet the product fails to get off the ground because nobody really embraces it from within? Lots of times is my best guesstimate.

When looking into innovations – or just projects, you’re doing for that matter – you should therefore never neglect to ask yourself the question, what happens after the release of the product. Do you have the skills, the know-how and the drive to make the new product a success, or will it be seen more like a distraction and thus risk withering away? You need to make an assessment of that before you invest too much into the product.

Where I work we have introduced an analysis model for all new ideas and projects, which includes taking stock of the operational fit of the project. Simply because we know it can be a challenge, and because I’m always keen to learn from past mistakes in the hope of not repeating them. We still need to see what real impact trying to take stock beforehand will have, but I have little doubt that it’s a crucial analysis to make.

And you thought cookies were tricky?

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Wake up and smell the coffee. The EU is coming towards you with something that has far deeper and more serious implications than cookies in itself will ever have; a monumental update to the date protection rules.

3 things stand out in the proposed new rules:

  1. The EU introduces a fundamental human ‘right to be forgotten’ meaning that every individual will have the right to demand that any data you may hold on them and which isn’t strictly necessary (and yes, strictly should probably be interpreted very literal) has to be deleted. Goodbye all strategies to pool data, mine them and make money of it.
  2. Personal identifiable information will also include IP-adresses, which will (1) provide a paradox of each site and service to register and keep even more information on the individual in order to make sure that the right identifiable parts are kept together for later possible deletion and (2) effectively kill off public networks with dynamic IP adresses, because just how are you going to make sure that an IP-address from a public coffee bar is personally identifiable?
  3. The new rules will be for the entire EU, which probably will mean that they will tilt to the restrictive part given that especially Germany have a very hard stance on collecting information on people due to quite obvious (for most people) historical reasons.

All in all I think it’s fair to say that if the proposal stands and end up being made into law as it stands now, it will turn the digital world upside down – at the very least the economic side of it. Business models will be destroyed, and we’re back to making each individual product count on it’s own merits with no real automation whatsoever.

Pretty scary stuff. And I haven’t even mentioned how these rules will skew competition between the EU and the rest of the world with less strict privacy rules. This will not only cost money and innovation potential but also real jobs. In a big way.